Video: Who's paying to clean up New Orleans

WASHINGTON — Taxpayers foot the bill for almost every scoop of Katrina debris dumped in landfills along the Gulf Coast. It may be trash, but it's also serious money.

And the cost to taxpayers increased even more in February, when New Orleans Mayor Ray Nagin used his emergency powers to allow a company to open a new landfill, which charged twice as much as another area landfill for the same debris.

The community that lives nearby was outraged.

"It is for the money," says Father Vien Nguyen with the Mary Queen of Vietnam Catholic Church. "That's why [Nagin] signed it. It is for the money."

You see, Mayor Nagin agreed to the deal after a national waste disposal company — Waste Management Inc. — promised to give New Orleans a big chunk of money.

Federal taxpayers, in effect, pay Waste Management for all Katrina debris dumped in the landfill — and, under the deal, the company agreed to give 22 percent of that revenue to New Orleans.

"It looks like an elaborate scheme that enriches the city of New Orleans, with federal taxpayers picking up egregiously high bills," says Sen. Susan Collins, R-Maine, chairwoman of the Senate Homeland Security Committee.

Although Louisiana state environmental regulators insisted the landfill was safe, locals were outraged because the new landfill borders on the Bayou Savage Wildlife Refuge. Even federal officials with the U.S. Fish and Wildlife Service were troubled.

Environmental lawyer Joel Waltzer accuses the city of selling out.

"The city is going to be receiving a kickback from the money that's paid for the disposal of waste in this facility," he says.

The mayor insists that the cost to taxpayers is fair and that the 22 percent for the city is a donation.

"We don't do kickbacks in city government," says Nagin.

Waste Management Inc. also insists there is nothing improper here. The company says it shares revenues with some other cities and that the location of its dump may save taxpayer money by cutting costs of hauling debris. The company also adds that its fees are not the only thing to consider, arguing that other issues like "transportation costs, turnaround times and volume per day that can be processed" need to be taken into account.

Because of local protests, the landfill recently was closed — for now. But not before it generated $3.825 million in taxpayer dollars for Waste Management — $842,000 of that to be passed on to New Orleans.

In a statement, the company writes: "Waste Management is proud to say that under the host fee, or donation agreement, as it was called in this case, we have raised more than $800,000 in support of the rebuilding of the City of New Orleans. As long as the landfill is closed, this badly needed funding stream is stopped."

"It's very short-sighted for the city of New Orleans," says Sen. Collins, "to try to game the system to get more funding when we already have appropriated billions of dollars."

The Federal Emergency Management Agency says it has no power over the terms of private contracts but will review the arrangement.

"FEMA will evaluate the concerns brought forth and make sure that the business practices meet FEMA guidelines," says spokesman Aaron Walker.

Federal investigators, meanwhile, are looking into whether the deal was improper — and whether taxpayer money was tossed out with the trash.